In brief announcements posted on the White House and Department of Treasury websites late on July 2, 2013, the Obama administration announced that it was postponing two related aspects of health care reform until 2015.
- First, Treasury is suspending for 2014 the requirement that employers provide reports to the IRS and participants regarding each worker’s access to and enrollment in group health insurance. However, voluntary reporting is encouraged so that employers may test their reporting systems.
- Second, because the reporting requirements form the basis for assessing the employer “play or pay” penalties for failing to provide employees with adequate group health coverage, those penalties are also being delayed until 2015. Consequently, employers will not, for 2014, face the potential $2,000 penalty per full-time employee if they fail to offer minimum essential coverage to all full-time employees and dependents, or the $3,000 penalty per full-time employee who receives subsidized coverage on a public exchange because the employer-provided coverage failed to meet certain affordability and minimum value requirements.
The reason given for the delay was to allow more time for consideration of ways to simplify the new reporting requirements, and for employers to adapt their health coverage and reporting systems. As a practical matter, though, the delay will set back implementation of the employer mandate until after the 2014 midterm elections. In any event, both the delay and the possibility of simplified reporting will be welcome news for many employers.
The announcements indicate that the public exchanges are still expected to open on October 1 to allow individuals and small employers to enroll for healthcare coverage for 2014, and that the subsidies for low- and moderate-income individuals to purchase coverage on the public exchanges also will be provided starting in 2014, as scheduled.
Formal guidance regarding the delay is to be provided in coming days. Employers should continue to monitor the situation, since the guidance may address important impacts of the delay, and other developments regarding the implementation of health care reform may be forthcoming.
Although the specter of the “play or pay” penalty has been postponed, employers still have a substantial “to do” list regarding their group health plans, including as a result of the Supreme Court’s decision last week with respect to the Defense Of Marriage Act, the final HIPAA regulations released earlier this year, and the many other aspects of health care reform which are marching forward. Click here for an Employer Planning Guide for Group Health Plans outlining the key items and deadlines.